Use of Chinese Yuan by U.S. Jumps

Yuan banknotes at a branch of Agricultural Bank of China in Qionghai, Hainan province, in April.

Zuma Press

As China promotes the use of the yuan around the world, the U.S. is increasingly using the currency to pay for goods from the mainland.

The value of yuan payments in the U.S. jumped more than threefold in the last year to April, placing it as the No. 3 country worldwide, excluding Hong Kong and China, in the use of the Chinese currency for transactions, according to the Society for Worldwide Interbank Financial Telecommunication, or Swift. Singapore ranked first, followed by the U.K.

Since 2009, Beijing has lifted key restrictions on the use of the yuan outside the country and has encouraged exporters and importers to use the currency–instead of the U.S. dollar–to buy and sell goods from and to China. The Chinese authorities have signed agreements with a range of global central banks to allow direct swaps of the yuan and foreign currencies.

The use of the yuan, also known as the renminbi, has ballooned as it has appreciated in value and the volume of offshore yuan-denominated bonds, dubbed dim-sum bonds, has soared in recent years. Despite a rare 3.2% drop in the yuan’s value against the U.S. dollar so far this year, the use of yuan to settle China-related trades remains robust.

Yuan remittances for cross-border trade between Hong Kong and China grew 53% in March, before shrinking 23% in April, according to the Hong Kong Monetary Authority, while yuan deposits in Hong Kong kept growing steadily. The yuan has weakened since the end of February, a three-month slide initiated by the Chinese central bank meant to shake out speculators betting on an uninterrupted rise in the currency.

In April, 2.6% of global yuan payments was carried out through the U.S., up from 1.3% a year ago, putting the U.S. ahead of Taiwan as an offshore yuan trading center, Swift said.

“Although the corridor remains dominated by the U.S. dollar, data suggests that the [U.S.] is increasingly using the [yuan] to support its corporates that want to reach more suppliers in mainland China,” said Michael Moon, Asian-Pacific head of payments at Swift. “This is good news for the internationalization of the [yuan] as a world payments currency.”

The yuan remained the seventh-biggest currency for global payments and accounted for 1.43% of payments in April, dropping slightly from 1.62% in March, Swift said.